SYS-CON MEDIA Authors: Mat Mathews, PR.com Newswire, David Smith, Tim Crawford, Kevin Benedict

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Essential Energy Services Announces First Quarter Results and Declares Quarterly Dividend

CALGARY, ALBERTA -- (Marketwired) -- 05/06/14 -- Essential Energy Services Ltd. (TSX: ESN) ("Essential" or the "Company") announces first quarter earnings.



SELECTED INFORMATION
                                                        For the three months
                                                             ended March 31,
(Thousands of dollars, except per share, percentages
 and fleet data)                                            2014        2013
----------------------------------------------------------------------------

Revenue                                              $   103,730 $   120,519

Gross margin                                              27,327      37,832
Gross margin %                                               26%         31%
EBITDA(1) from continuing operations                      22,507      33,426
EBITDA %(1)                                                  22%         28%

Net income attributable to shareholders of Essential      10,149      18,627
  Per share - basic and diluted                             0.08        0.15

Total assets                                             439,745     436,301
Total long-term debt                                      50,821      35,603

Utilization
  Deep coil tubing rigs                                      77%        110%
  Service rigs                                               66%         69%
Equipment fleet
  Masted deep coil tubing rigs                                16          14
  Conventional deep coil tubing rigs                          12          11
  Service rigs                                                55          56

1 Refer to "Non-IFRS Measures" section for further information.

At $103.7 million and $22.5 million, respectively, Essential's first quarter 2014 revenue and EBITDA(1) were lower than the prior year and below management's expectations. A slow start to the quarter and periods of unusually cold weather disrupted the ability to provide services to customers, reducing revenue and contributing to higher costs as a percentage of revenue. Essential also experienced inconsistency in sales during the quarter due to variances in customer activity and increased competition. Two of Essential's three primary service lines were adversely impacted by these factors.

Masted deep coil tubing utilization was 109%, below the prior quarter of 148%, due to the factors noted above and new equipment delivery issues. The masted deep coil tubing fleet increased by two rigs compared to the first quarter of 2013 with the addition of two Generation III masted deep coil tubing rigs. These two new rigs contributed less than expected due to delivery timing and new equipment commissioning time. Delays in the delivery of two Generation IV masted deep coil tubing rigs resulted in gross margin reductions due to the absence of revenue and increased costs for manpower related to hiring additional crews in anticipation of delivery. These two rigs are expected to be delivered in the second quarter.

Essential's first quarter 2014 coil well service results are anticipated to be a temporary circumstance caused by delivery delays of new masted deep coil tubing rigs, adverse weather conditions and unique competitive circumstances. Management continues to be optimistic about the future of its masted deep coil tubing, fluid and nitrogen pumping operations as new equipment is delivered and commissioned. The incremental costs associated with coil well service in the first quarter 2014 are expected to be temporary and management expects margins will improve for the remainder of the year once new equipment is delivered and working at expected utilization.

Service rigs performed well in the quarter despite the unusual cold winter weather. With utilization at 66%, service rigs were less affected by the weather events in the quarter than the other service lines.

Conventional downhole tools and rentals activity increased over the prior quarter resulting in higher revenue. Demand for production-related and abandonment tool products, Essential's service locations, which are strategically positioned in active oil-related basins, across western Canada, and growth in the rentals business all contributed to this success. This increase was more than offset by reduced sales of the Tryton Multi-stage Fracturing System ("Tryton MSFS®") compared to the first quarter of 2013. Management believes the revenue decline was primarily the result of some customers choosing to broaden their choice of completion techniques. Competitive bidding practices and service bundling practices also affected Tryton MSFS® revenue in the quarter. Essential has faced these types of competitive industry pressures in the past and expects to overcome them in the future. Gross margin was negatively impacted by the Tryton MSFS® revenue decline and the United States operations.

INDUSTRY OVERVIEW

Industry activity in the first quarter was comparable to the first quarter of 2013. Drilling rig utilization increased three percentage points, well completion count was flat and the number of wells drilled decreased by 4%. These are indicators of overall oilfield activity in the Western Canadian Sedimentary Basin ("WCSB").

Well service activity in the WCSB continues to be driven by horizontal drilling, completion and stimulation of oil and liquids-rich natural gas wells. Horizontal wells typically require more investment capital and increased rig time per well due to their depth and complexity compared to conventional vertical wells. The first quarter of 2014 saw a slight shift towards natural gas drilling activity away from oil.



SEGMENT RESULTS - WELL SERVICING
----------------------------------------------------
                                                          Three months ended
                                                                   March 31,
(Thousands of dollars, except percentages, fleet and
 hours)                                                     2014        2013
----------------------------------------------------------------------------

Revenue
  Coil Well Service (i)                              $    41,499 $    49,621
  Service Rigs                                            32,499      33,556
----------------------------------------------------------------------------

Total revenue                                             73,998      83,177

Operating expenses                                        54,261      56,042
----------------------------------------------------------------------------

Gross margin                                         $    19,737 $    27,135
    Gross margin %                                           27%         33%
----------------------------------------------------------------------------

Utilization (ii)
----------------------------------------------------
  Deep coil tubing rigs
  Utilization                                                77%        110%
  Operating hours                                         19,131      24,765

  Service rigs
  Utilization                                                66%         69%
  Operating hours                                         32,616      34,364
Equipment fleet (iii)
----------------------------------------------------
  Masted deep coil tubing rigs                                16          14
  Conventional deep coil tubing rigs                          12          11
  Service rigs                                                55          56
  Nitrogen pumpers                                            14          13
  Fluid pumpers                                               18          18

(i) Includes revenue from coil tubing rigs, nitrogen and fluid pumpers and other ancillary equipment.

(ii) Utilization is calculated using a 10 hour day.

(iii) Fleet data represents the number of units at the end of the period.

Essential's masted deep coil tubing utilization was down quarter-over-quarter at 109% compared to 148% in 2013. The decrease in utilization was driven by a slow start at the beginning of the quarter, lower activity from certain customers, unusually cold weather hindering the ability for equipment to work at certain times and increased competition. The masted deep coil tubing fleet increased by two rigs compared to the first quarter of 2013 with the addition of two Generation III masted deep coil tubing rigs. These two new rigs contributed less revenue than expected due to delivery timing and new equipment commissioning time.

Conventional deep coil tubing utilization was down quarter-over-quarter at 35% compared to 62% in 2013. Revenue was below the prior quarter due to lower activity from certain customers, the impact of specialty work completed in the prior quarter that did not recur in the first quarter of 2014 and increased competition in the less technical two inch conventional coil tubing market.

Service rig utilization was 66% compared to 69% in the prior quarter, performing well compared to the CAODC service rig industry utilization of 55%. Utilization was particularly strong in the Grande Prairie and Fort St. John areas as well as for the rigs working in SAGD operations.

Gross margin percentage for well servicing in the first quarter of 2014 was negatively impacted by lower utilization and higher operating costs as a percentage of revenue. Revenue per hour for coil well service and service rigs was consistent with the prior quarter. Coil well service operating expenses were impacted by incremental labour costs incurred to retain employees during periods of lower utilization and costs to hire additional crews in anticipation of the delivery of the new deep masted coil tubing rigs.

Service rigs incurred higher repairs and maintenance costs in the first quarter of 2014 compared to 2013. Coil well service and service rigs were both impacted by higher fuel costs.



SEGMENT RESULTS - DOWNHOLE TOOLS & RENTALS
----------------------------------------------------
                                                          Three months ended
                                                                   March 31,
(Thousands of dollars, except percentages)                  2014        2013
----------------------------------------------------------------------------

Revenue                                              $    30,286 $    37,342

Operating expenses                                        21,228      24,374
----------------------------------------------------------------------------

Gross margin                                         $     9,058 $    12,968
  Gross margin %                                             30%         35%

Downhole Tools & Rentals Revenue- revenue % of total
  Tryton MSFS®                                             39%         60%
  Conventional Tools & Rentals                               61%         40%

Conventional Canadian downhole tools and rentals revenue increased by 14% over the prior quarter. Demand for production-related and abandonment tool products, Essential's service locations, which are strategically positioned in active oil-related basins across western Canada, and growth in the rentals business all contributed to this success. Canadian conventional tool revenue for the three months ended March 31, 2014 was one of the best quarters for this business despite adverse cold weather that disrupted revenue in other areas of Essential's operations. Rentals revenue increased compared to the prior quarter from an expanded offering of specialty heavy-weight range three drill pipe and a broadening of the customer base through enhanced sales initiatives.

Tryton MSFS® revenue declined quarter-over-quarter by approximately $10.6 million, to $11.8 million, which was significantly below management's expectations. Management believes this revenue decline was primarily the result of some customers choosing to broaden their choice of completion techniques. Competitive bidding practices and service bundling practices also affected Tryton MSFS® revenue in the quarter. Similar to industry events adversely impacting Essential's well servicing businesses, Tryton MSFS® revenue was reduced by a slow start at the beginning of the quarter and unusually cold weather at certain times. New competing technologies, competitor practices and adverse industry conditions have all been experienced in previous quarters since the introduction of the Tryton MSFS® in 2009. Essential has faced these types of competitive industry pressures in the past and expects to overcome them in the future.

Gross margin and gross margin percentage were lower in the current quarter primarily due to lower Tryton MSFS® revenue and Essential's United States downhole tools operation. Price per job for Tryton MSFS® products experienced moderate declines quarter-over-quarter as the industry continued to respond to customer demand for lower cost completion technologies. Essential's United States conventional downhole tool business, which started operations in the third quarter of 2013, continued to realize quarterly revenue growth during the first quarter of 2014, however, this operation continued to generate negative gross margin as it further established a customer base and increased sales.

On April 30, 2014, Essential acquired all of the issued and outstanding shares of Sam's Packer & Supply LLC, a private downhole tool company that operates in Norman, Oklahoma and Liberal, Kansas. Sam's Packer & Supply LLC has been in business for more than 30 years and provides conventional tool sales, rentals and services to a diversified customer base in Oklahoma, Kansas and Texas. The purchase price was US$5.1 million plus possible incremental future performance payments of up to US$0.5 million in the next two years, and working capital adjustments.



GENERAL AND ADMINISTRATIVE
----------------------------------------------------
                                                          Three months ended
                                                                   March 31,
(Thousands of dollars, except percentages)                  2014        2013
----------------------------------------------------------------------------

General and administrative expenses                  $     4,820 $     4,406
  As a % of revenue                                           5%          4%
----------------------------------------------------------------------------

General and administrative expenses are comprised of wages, professional fees, office space and other administrative costs incurred at corporate and operational levels. The increase compared to the prior quarter is due to higher employee costs, additional facility lease costs and higher legal fees.



OTHER EXPENSE
-----------------------------------------------------
                                                         Three months ended
                                                                  March 31,
(Thousands of dollars)                                      2014       2013
----------------------------------------------------------------------------

Other expense (income)                                $      755 $     (133)
----------------------------------------------------------------------------

Other expense in the first quarter of 2014 relates to losses on assets sold and retired assets, compared to the first quarter of 2013, when a gain on the sale of fixed assets was realized.



INCOME TAXES
------------------------------------------------------
                                                          Three months ended
                                                                   March 31,
(Thousands of dollars)                                       2014       2013
----------------------------------------------------------------------------

Current income tax expense                             $    2,782 $    4,425
Deferred income tax expense                                   952      2,166
----------------------------------------------------------------------------

Total income tax expense                               $    3,734 $    6,591
----------------------------------------------------------------------------

During the first quarter of 2014, income tax expense decreased compared to the first quarter of 2013 due to lower reported earnings before income taxes.



FINANCIAL RESOURCES AND LIQUIDITY

WORKING CAPITAL
----------------------------------------------------
                                                          As at       As at
                                                       March 31 December 31
(Thousands of dollars, except ratios)                      2014        2013
----------------------------------------------------------------------------

Current assets                                       $  121,390 $   107,945
Current liabilities, excluding current portion of
 long-term debt                                         (41,810)    (45,419)
----------------------------------------------------------------------------

Working capital                                      $   79,580 $    62,526
----------------------------------------------------------------------------

Working capital ratio                                     2.9:1       2.4:1
----------------------------------------------------------------------------


EQUIPMENT EXPENDITURES AND FLEET ADDITIONS
----------------------------------------------------
                                                         Three months ended
                                                                  March 31,
(Thousands of dollars)                                     2014        2013
----------------------------------------------------------------------------

  Well Servicing                                     $    6,807  $    6,142
  Downhole Tools & Rentals                                3,716         444
  Corporate                                                 525         238
----------------------------------------------------------------------------
Total equipment expenditures                             11,048       6,824
----------------------------------------------------------------------------

Less proceeds on disposal of property
and equipment                                              (865)       (540)
----------------------------------------------------------------------------
Net equipment expenditures(1)                        $   10,183  $    6,284
----------------------------------------------------------------------------

During the first quarter, one Generation III rig was commissioned and put into service. During the second quarter, two Generation IV rigs are expected to be delivered and will be put into service in the third quarter of 2014.

Essential classifies its equipment expenditures as growth capital(1) and maintenance capital(1):



                                                          Three months ended
                                                                   March 31,
(Thousands of dollars)                                       2014       2013
----------------------------------------------------------------------------
  Growth capital(1)                                    $    8,539 $    4,766
  Maintenance capital(1)                                    2,509      2,048
----------------------------------------------------------------------------
Total equipment expenditures                           $   11,048 $    6,824
----------------------------------------------------------------------------

Essential's 2014 capital budget of $53 million is comprised of $36 million in growth capital and $17 million of maintenance capital. This includes $3 million of carry-in from 2013. Growth capital consists primarily of seven masted deep coil tubing rigs and rental equipment. The capital budget was updated to include an investment in rental equipment offset by the cancellation of the previously announced rod rig and fluid pumper.

The Company believes that it has access to sufficient funds through internally generated cash flows and from the credit facility to meet current spending needs.

The following table shows the expected dates of the major equipment being built over the remainder of 2014 and early 2015:


                                                      Expected Dates
                                 Quantity                 2014 /2015
--------------------------------------------------------------------

Deep masted coil tubing rigs            6    Q2(2),Q3,Q4,Q1'15,Q2'15
--------------------------------------------------------------------

OUTLOOK

With the delayed spring breakup in the WCSB, some equipment continued to work into the beginning of April 2014. Essential expects that oilfield service activity following breakup will return to a more typical post-spring breakup level as compared to the same period in 2013, which was extremely wet and prolonged. Unlike a year ago, some customers are providing positive indications for work programs and plans after breakup.

The Petroleum Association of Canada continues to forecast consistent activity expectations year-over-year compared to 2013. Generally speaking, exploration and production ("E&P") capital budgets for 2014 are consistent with 2013. Essential believes there are reasons for optimism in the second half of the year including: a weaker Canadian dollar which would increase E&P cash flows, improved access to equity capital markets for E&P companies, improved natural gas prices and oil prices that have been relatively strong.

The longer term outlook remains positive for the development of proposed liquefied natural gas ("LNG") projects in British Columbia. Development of the Montney, Horn River and Duvernay basins for LNG export is expected to increase the demand for oilfield services, including the demand for Essential's deep coil tubing and downhole tools & rentals.

Essential's $53 million equipment expansion program for 2014 will add significant growth to Essential's masted deep coil tubing fleet. Essential expects to put into service two Generation IV masted deep coil tubing rigs in the third quarter and take delivery of one Generation III and one Generation IV rig in the remainder of 2014. These rigs have industry leading large diameter coil-carrying capacity making them uniquely capable of working on long-reach horizontal wells.

Essential has a strong balance sheet with $47.2 million of debt outstanding on May 6, 2014 and a debt to EBITDA ratio of 0.9x.

QUARTERLY DIVIDEND

The cash dividend for the period April 1, 2014 to June 30, 2014 has been set at $0.03 per share. The dividend will be paid on July 15, 2014 to shareholders of record on June 30, 2014. The ex-dividend date is June 26, 2014.

The Management's Discussion and Analysis and Financial Statements are available on Essential's website at www.essentialenergy.ca and on SEDAR at www.sedar.com.

(1)Non-IFRS Measures

Throughout this news release, certain terms that are not specifically defined in International Financial Reporting Standards ("IFRS") are used to analyze Essential's operations. In addition to the primary measures of net earnings and net earnings per share in accordance with IFRS, Essential believes that certain measures not recognized under IFRS assist both Essential and the reader in assessing performance and understanding Essential's results. Each of these measures provides the reader with additional insight into Essential's ability to fund principal debt repayments, capital programs and pay dividends. As a result, the method of calculation may not be comparable with other companies. These measures should not be considered alternatives to net earnings and net earnings per share as calculated in accordance with IFRS.

EBITDA (Earnings before finance costs, income taxes, depreciation, amortization, transaction costs, non- controlling interest earnings, losses or gains on disposal of equipment, results of discontinued operations and share-based compensation, which includes both equity-settled and cash-settled transactions) - This measure is considered an indicator of Essential's ability to generate funds flow in order to fund required working capital, service debt, fund capital programs and pay dividends.

EBITDA % - This measure is considered an indicator of Essential's ability to generate funds flow as calculated by EBITDA divided by revenue.

Working capital - Working capital is calculated as current assets less current liabilities.

Growth capital - Growth capital is capital spending which is intended to result in incremental increases in revenue. Growth capital is considered to be a key measure as it represents the total expenditures on equipment expected to add incremental revenues and funds flow to Essential.

Maintenance capital - Equipment additions that are incurred in order to refurbish or replace previously acquired equipment less proceeds on the disposal of retired equipment. Such additions do not provide incremental increases in revenue. Maintenance capital is a key component in understanding the sustainability of Essential's business as cash resources retained within Essential must be sufficient to meet maintenance capital needs to replenish the assets for future cash generation.

Net equipment expenditures - This measure is equipment expenditures less proceeds on the disposal of equipment. Essential uses net equipment expenditures to assess net cash flows related to the financing of Essential's oilfield services equipment.



SUMMARY OF QUARTERLY DATA

(Thousands of dollars, except
 per share                        Mar 31,    Dec 31,   Sept 30,    Jun 30,
amounts, percentages and fleet
 data)                               2014       2013       2013       2013
----------------------------------------------------------------------------

Well Servicing:
  Coil Well Service                41,499     36,150     33,037      9,433
  Service Rigs                     32,499     25,593     23,870     14,732
  Other (i)                             -          -          -          -
----------------------------------------------------------------------------
Total well servicing               73,998     61,743     56,907     24,165

Downhole Tools & Rentals           30,286     31,560     28,185     14,252

Inter-segment eliminations           (554)      (480)      (582)         -
----------------------------------------------------------------------------

Total revenue                     103,730     92,823     84,510     38,417
----------------------------------------------------------------------------

Gross margin                       27,327     25,332     21,414     (1,310)
  Gross margin %                      26%        27%        25%         (3)%
EBITDA(1)                          22,507     20,705     17,132     (5,171)
  EBITDA %(1)                         22%        22%        20%        (13)%

Continuing operations
  Net income (loss)                10,149      9,478      4,292     (8,958)
  Per share - basic and diluted $    0.08  $    0.07  $    0.03  $   (0.07)

Net income (loss) attributable
  to shareholders of Essential     10,149     11,126      3,843    (11,501)
  Per share - basic and diluted $    0.08  $    0.09  $    0.03  $   (0.09)

Total assets                      439,745    423,963    409,613    380,728
Total long-term debt               50,821     39,027     40,484     14,592
----------------------------------------------------------------------------

Utilization (ii)
  Deep coil tubing rigs               77%        74%        73%        18%
  Pumpers                             69%        55%        47%        14%
  Service rigs                        66%        53%        50%        28%
Operating Hours
  Deep coil tubing rigs            19,131     18,257     17,724      4,125
  Pumpers                          19,995     16,612     14,418      4,241
  Service rigs                     32,616     26,557     25,084     14,234
Downhole Tools & Rentals -
 revenue % of total
  Tryton MSFS®                      39%        55%        55%        40%
  Conventional Tools & Rentals        61%        45%        45%        60%
----------------------------------------------------------------------------

Equipment fleet (iii)
  Masted deep coil tubing rigs         16         15         15         14
  Conventional deep coil tubing
   rigs                                12         12         12         11
  Coil tubing rigs - other             18         18         18         19
  Service rigs                         55         55         54         56
  Nitrogen pumpers                     14         14         15         15
  Fluid pumpers                        18         18         18         18
  Rod rigs                             13         13         12         14


SUMMARY OF QUARTERLY DATA

(Thousands of dollars, except
 per share                        Mar 31,    Dec 31,    Sep 30,    Jun 30,
amounts, percentages and fleet
 data)                               2013       2012       2012       2012
---------------------------------------------------------------------------

Well Servicing:
  Coil Well Service                49,621     41,228     33,857     18,697
  Service Rigs                     33,556     26,012     20,552     15,564
  Other (i)                             -        786      2,762      1,069
---------------------------------------------------------------------------
Total well servicing               83,177     68,026     57,171     35,330

Downhole Tools & Rentals           37,342     27,989     26,342     15,540

Inter-segment eliminations              -          -          -          -
---------------------------------------------------------------------------

Total revenue                     120,519     96,015     83,513     50,870
---------------------------------------------------------------------------

Gross margin                       37,832     27,039     23,012      3,904
  Gross margin %                      31%        28%        28%         8%
EBITDA(1)                          33,426     22,368     19,261        (42)
  EBITDA %(1)                         28%        23%        23%         0%

Continuing operations
  Net income (loss)                19,205      8,050      8,343     (5,453)
  Per share - basic and diluted $    0.15  $    0.06  $    0.07  $   (0.04)

Net income (loss) attributable
  to shareholders of Essential     18,627        678      8,660     (5,923)
  Per share - basic and diluted $    0.15  $    0.01  $    0.07  $   (0.05)

Total assets                      436,301    406,853    415,653    393,377
Total long-term debt               35,603     35,563     50,474     41,198
---------------------------------------------------------------------------

Utilization (ii)
  Deep coil tubing rigs              110%        95%        79%        32%
  Pumpers                             73%        57%        50%        33%
  Service rigs                        69%        54%        45%        34%
Operating Hours
  Deep coil tubing rigs            24,765     22,777     18,301      7,262
  Pumpers                          20,481     15,328     11,919      7,504
  Service rigs                     34,364     27,310     22,632     16,183
Downhole Tools & Rentals -
 revenue % of total
  Tryton MSFS®                      60%        51%        52%        40%
  Conventional Tools & Rentals        40%        49%        48%        60%
---------------------------------------------------------------------------

Equipment fleet (iii)
  Masted deep coil tubing rigs         14         16         16         16
  Conventional deep coil tubing
   rigs                                11         11         10          9
  Coil tubing rigs - other             19         19         19         20
  Service rigs                         56         55         55         53
  Nitrogen pumpers                     13         13         10         10
  Fluid pumpers                        18         18         16         16
  Rod rigs                             14         14         14         14

(i) Other revenue included revenue from Essential's drilling operation until its disposal in November 2012.

(ii) Utilization is calculated using a 10 hour day.

(iii) Fleet data represents the number of units at the end of the period.



ESSENTIAL ENERGY SERVICES LTD.
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
(Unaudited)
                                                         As at         As at
                                                      March 31   December 31
(Thousands)                                               2014          2013
----------------------------------------------------------------------------

Assets
Current
  Trade and other accounts receivable            $      89,573 $      76,640
  Inventories                                           29,134        27,979
  Prepayments                                            2,683         3,326
----------------------------------------------------------------------------
                                                       121,390       107,945
----------------------------------------------------------------------------

Non-current
  Property and equipment                               233,563       230,292
  Intangible assets                                     29,778        30,712
  Goodwill                                              55,014        55,014
----------------------------------------------------------------------------
                                                       318,355       316,018
----------------------------------------------------------------------------

Total assets                                     $     439,745 $     423,963
----------------------------------------------------------------------------

Liabilities
Current
  Bank indebtedness                              $       4,025 $       2,112
  Trade and other accounts payable                      33,487        36,161
  Dividends payable                                      3,768         3,765
  Income taxes payable                                     530         3,381
  Current portion of long-term debt                     14,096         7,603
----------------------------------------------------------------------------
                                                        55,906        53,022
----------------------------------------------------------------------------

Non-current
  Long-term debt                                        36,725        31,424
  Deferred tax liabilities                              27,312        26,360
----------------------------------------------------------------------------
                                                        64,037        57,784
----------------------------------------------------------------------------

Total liabilities                                      119,943       110,806
----------------------------------------------------------------------------

Equity
  Share capital                                        262,394       262,177
  Retained earnings                                     53,003        46,622
  Other reserves                                         4,405         4,358
----------------------------------------------------------------------------
Total equity                                           319,802       313,157
----------------------------------------------------------------------------


Total liabilities and equity                     $     439,745 $     423,963
----------------------------------------------------------------------------


ESSENTIAL ENERGY SERVICES LTD.
CONSOLIDATED STATEMENTS OF NET INCOME AND COMPREHENSIVE INCOME
(Unaudited)
                                                 For the three months ended
                                                                   March 31
(Thousands, except per share amounts)                   2014           2013
----------------------------------------------------------------------------

Revenue                                        $     103,730  $     120,519

Operating expenses                                    76,403         82,687
----------------------------------------------------------------------------
Gross margin                                          27,327         37,832

General and administrative expenses                    4,820          4,406
----------------------------------------------------------------------------
                                                      22,507         33,426
Depreciation and amortization                          6,785          7,044
Share-based compensation                                 651            343
Other expense (income)                                   755           (133)
----------------------------------------------------------------------------
Operating profit from continuing operations           14,316         26,172
Finance costs                                            433            376
----------------------------------------------------------------------------
Net income before income tax from continuing
 operations                                           13,883         25,796

Current income tax expense                             2,782          4,425
Deferred income tax expense                              952          2,166
----------------------------------------------------------------------------
Total income tax expense                               3,734          6,591
----------------------------------------------------------------------------

Net income from continuing operations                 10,149         19,205
----------------------------------------------------------------------------

Loss from discontinued operations, net of tax              -           (607)
----------------------------------------------------------------------------

Net income                                            10,149         18,598
----------------------------------------------------------------------------

Unrealized foreign exchange loss from
 continuing operations                                   (86)             -
Unrealized foreign exchange loss from
 discontinued operations                                   -            (31)
----------------------------------------------------------------------------
Other comprehensive loss                                 (86)           (31)
----------------------------------------------------------------------------

Comprehensive income                           $      10,063  $      18,567
----------------------------------------------------------------------------

Net income (loss) attributable to:
  Shareholders of Essential                    $      10,149  $      18,627
  Non-controlling interest                                 -            (29)
----------------------------------------------------------------------------
                                               $      10,149  $      18,598
----------------------------------------------------------------------------

Comprehensive income (loss) attributable to:
  Shareholders of Essential                    $      10,063  $      18,597
  Non-controlling interest                                 -            (30)
----------------------------------------------------------------------------
                                               $      10,063  $      18,567
----------------------------------------------------------------------------

Net income per share from continuing
 operations
  Basic and diluted, attributable to
   shareholders of Essential                   $        0.08  $        0.15

Net income per share
  Basic and diluted, attributable to
   shareholders of Essential                   $        0.08  $        0.15

Comprehensive income per share
  Basic and diluted, attributable to
   shareholders of Essential                   $        0.08  $        0.15


ESSENTIAL ENERGY SERVICES LTD.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
                                                 For the three months ended
                                                                   March 31
(Thousands)                                             2014           2013
----------------------------------------------------------------------------

Operating activities:

Net income from continuing operations          $      10,149  $      19,205

Non-cash adjustments to reconcile net income
 for the period to operating cash flow:
  Depreciation and amortization                        6,785          7,044
  Deferred income tax expense                            952          2,166
  Share-based compensation                               211            343
  Provision for impairment of trade accounts
   receivable                                            225            250
  Finance costs                                          433            376
  Loss (gain) on disposal and retirement of
   assets                                              1,046           (106)
----------------------------------------------------------------------------
Operating cash flow before changes in working
 capital                                              19,801         29,278
Change in non-cash operating working capital:
  Trade and other accounts receivable before
   provision                                         (13,276)       (31,159)
  Inventories                                         (1,155)          (762)
  Prepayments                                            643            658
  Trade and other accounts payable                     1,141          6,201
  Current taxes payable                               (2,851)         1,795
----------------------------------------------------------------------------
Net cash provided by operating activities from
 continuing operations                                 4,303          6,011
----------------------------------------------------------------------------

Investing activities:
  Purchase of property, equipment and
   intangibles                                       (11,048)        (6,824)
  Non-cash investing working capital in trade
   and other accounts payable                         (3,815)         1,061
  Proceeds on disposal of equipment                      865            540
----------------------------------------------------------------------------
Net cash used in investing activities from
 continuing operations                               (13,998)        (5,223)
----------------------------------------------------------------------------

Financing activities:
  Issuance of long-term debt                          11,794             40
  Proceeds from exercise of share options                140             88
  Repurchase of shares                                     -             (8)
  Dividends paid                                      (3,765)        (3,100)
  Finance costs                                         (433)          (376)
----------------------------------------------------------------------------
Net cash from (used in) financing activities
 from continuing operations                            7,736         (3,356)
----------------------------------------------------------------------------

Foreign exchange loss on cash held in a
 foreign currency                                         46              -
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Net increase in bank indebtedness                     (1,913)        (2,568)
Bank indebtedness, beginning of period                (2,112)        (1,835)
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Bank indebtedness, end of period               $      (4,025) $      (4,403)
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Supplemental cash flow information
  Cash taxes paid                              $       5,650  $       2,630
  Cash interest and standby fees paid                    386            328
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2014 FIRST QUARTER EARNINGS CONFERENCE CALL AND WEBCAST

Essential has scheduled a conference call and webcast at 10:00 am MT (12:00 pm ET) on May 7, 2014.

The conference call dial in numbers are 416-340-2217 or 866-696-5910, passcode 3606107.

An archived recording of the conference call will be available approximately one hour after completion of the call until May 23, 2014 by dialing 905-694-9451 or 800-408-3053, passcode 7279612.

A live webcast of the conference call will be accessible on Essential's website at www.essentialenergy.ca by selecting "Investors" and "Events and Presentations". Shortly after the live webcast, an archived version will be available for approximately 30 days.

ABOUT ESSENTIAL

Essential is a growth-oriented, dividend paying corporation that provides oilfield services to producers in western Canada for producing wells and new drilling activity. Essential operates the largest coil tubing well service fleet in Canada with 46 coil tubing rigs and a fleet of 55 service rigs. Essential also sells, rents and services downhole tools and equipment including the Tryton MSFS®. Further information can be found at www.essentialenergy.ca.

FORWARD-LOOKING STATEMENTS AND INFORMATION

This news release contains forward-looking statements and forward-looking information within the meaning of applicable securities laws. The use of any of the words "expect", "anticipate", "continue", "estimate", "objective", "ongoing", "may", "will", "project", "should", "believe", "plans", "intends", "budget", "scheduled", "forecast" and similar expressions are intended to identify forward-looking information or statements. In particular, this news release contains forward-looking statements, including expectations regarding: capital spending, in-service timing of new equipment, demand for new equipment, future cash flow and earnings, access to sufficient funding, the future areas of development in the WCSB, the level and type of drilling activity, completion activity, work-over activity, production activity and required oilfield services in the WCSB, the business, operations and revenues of the Company in addition to general economic conditions, Essential's ability to meet the changing needs of the WCSB market, the capital spending programs of E&P companies, Essential's positioning for the future, the temporary nature of the first quarter 2014 coil well service results and the future of the coil well service operations and Essential's ability to overcome competitive industry pressure for the multi-stage fracturing system. In addition, this news release contains forward looking statements, including expectations regarding: the Company's outlook for the second half of 2014 including: a weaker Canadian dollar increasing E&P cash flows, improving access to equity capital markets for E&P companies and improving natural gas prices and relatively strong oil prices, development of proposed LNG projects in British Columbia, development of the Montney, Horn River and Duvernay basins for LNG export increasing the demand for oilfield services (including the demand for Essential's deep coil tubing and downhole tools & rentals), oilfield service activity following breakup and any financial resource or liquidity issues restricting Essential's future operating, investing or financing activities.

Although the Company believes that the expectations and assumptions on which such forward-looking statements and information are reasonable, undue reliance should not be placed on the forward-looking statements and information because the Company can give no assurance that such statements and information will prove to be correct. Since forward-looking statements and information address future events and conditions, by their very nature they involve inherent risks and uncertainties.

Actual performance and results could differ materially from those currently anticipated due to a number of factors and risks. These include, but are not limited to: known and unknown risks, including those set forth in the Annual Information Form (a copy of which can be found under Essential's profile on SEDAR at www.sedar.com), the risks associated with the oilfield services sector (e.g. demand, pricing and terms for oilfield services; current and expected oil and natural gas prices; exploration and development costs and delays; reserves discovery and decline rates; pipeline and transportation capacity; weather, health, safety and environmental risks); integration of acquisitions, competition, and uncertainties resulting from potential delays or changes in plans with respect to acquisitions, development projects or capital expenditures and changes in legislation, including but not limited to tax laws, royalties, incentive programs and environmental regulations; stock market volatility and the inability to access sufficient capital from external and internal sources; the ability of the Company's subsidiaries to enforce legal rights in foreign jurisdictions; general economic, market or business conditions; global economic events; changes to Essential's financial position and cash flow; the availability of qualified personnel, management or other key inputs; currency exchange fluctuations; changes in political and security stability; risks and uncertainty related to distribution and pipeline constraints; and other unforeseen conditions which could impact the use of services supplied by the Company. Accordingly, readers should not place undue reliance on the forward-looking statements and forward-looking information. Readers are cautioned that the foregoing list of factors is not exhaustive.

Additional information on these and other factors that could affect the Company's operations and financial results are included in reports on file with applicable securities regulatory authorities and may be accessed through the SEDAR website at www.sedar.com for the Company. The forward-looking statements and information contained in this news release are made as of the date hereof and the Company undertakes no obligation to update publicly or revise any forward-looking statements or information, whether as a result of new information, future events or otherwise, unless so required by applicable securities laws.

The TSX has neither approved nor disapproved the contents of this news release.

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